Dena Bank vs Tejendra Nath Biswas & Ors on 15 June, 2011

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Calcutta High Court (Appellete Side)

Dena Bank vs Tejendra Nath Biswas & Ors on 15 June, 2011

Bench: Tapen Sen

                                        1


                      In the High Court at Calcutta
                       Constitutional Writ Jurisdiction
                               Appellate Side



                          W. P. No. 21564 (W) of 2010

                                   Dena Bank

                                     Vs.
                         Tejendra Nath Biswas & Ors.

                  CORAM: the Hon'ble Mr. Justice Tapen Sen


For the Petitioners      :   Mr. R.N. Majumder,
                             Mr. Sudarsan Roy,
                             Mr. Sourav Chakraborty
For the Respondent No. 1:    Mr. Lakshman Chandra Halder

Heard On : 29.11.10, 14.2.11,15.2.11,21.2.11, 11.3.11, 15.3.11, 16.3.11 C.A.V. On : 16.3.2011 Judgment delivered on : 15th June, 2011 Tapen Sen, J.: The Petitioner (Dena Bank) having its Regional Office at "Mangal Kalash" , 2A Shakespeare Sarani, Kolkata, has filed this Writ Petition praying for an Order for quashing the Orders dated 23.6.2009 as contained in Annexure-P/9, whereby and whereunder the Assistant Labour Commissioner (Central), Kolkata being the Controlling Authority under the Payment of Gratuity Act, 1972, came to the conclusion that the action taken by the Petitioner Bank in forfeiting the gratuity was not legal and that the Respondent No. 1 (Tejendra nath Biswas) was entitled to gratuity for the period of continuous service rendered by him w.e.f. 9.5.1973 to 31.8.2006 amounting to a sum of Rs. 3, 50,000/- (Rupees 2 Three lakh fifty thousand) together with simple interest @ 10% per annum from the date the said gratuity became payable to him.

2. The Petitioner has also prayed for quashing the Order dated 22.9.2009 as contained in Annexure- P/13 being the communication to the Petitioner as well as to the Respondent No. 1 enclosing therewith the Appellate Order of the same date by which the decision of the controlling authority was upheld.

3. The Petitioner has also prayed for an Order restraining the Respondent No. 3 [Assistant Labour Commissioner (Central) Kolkata] from disbursing the amount of Rs. 4, 51,548/- (Rupees four lakh fifty one thousand five hundred forty eight) which was deposited by the Petitioner in terms of the impugned Order dated 23.6.2009 (Annexure-P/9).

4. The short facts are that the Respondent No. 1 who was posted as a Manager in the Manicktala Branch, Kolkata, retired from service on attaining the age of superannuation on and from 31.8.2006. However, before his retirement, a Charge-sheet dated 3.4.2006 had been served upon him in relation to certain acts of misconduct. Pursuant to the said Charge-sheet, a departmental proceeding was held and since there was no likelihood of the same concluding before retirement, the provisions of Regulation 20(3) (iii) of the Dena Bank (Officers) Service Regulations 1979 was invoked vide letter of the same day i.e. 17.8.2006 (Annexure-P/1A). Regulation 20(3) (iii) reads as under:-

Reg. 20.3 (iii)-

"The officer against whom the disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The concerned officer will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF."

(Quoted)

5. It is pleaded that subsequently the departmental enquiry concluded and the charges levelled against the Respondent No. 1 were proved and therefore, he was dismissed without notice w.e.f. 31.8.2006 vide Memorandum dated 1.3.2007(Annexure-P/2).

6. Being aggrieved, the Respondent No. 1 filed an appeal on 16.4.2007 before the Appellate Authority and by an Order dated 15.6.2007 (Annexure-P/4), the said Appellate Authority being the Regional Manager confirmed the Order of punishment referred to above.

7. Thereafter a Notice for forfeiture of the Bank's contribution of the Provident Fund was issued upon the Respondent No. 1 by letter dated 22.12.2008 (Annexure-P/5) by which he was called upon to show Cause as to why the said contribution as well as Gratuity be not forfeited to the extent indicated therein. It appears that the Bank's contribution was Rs. 2,47,551.53 and interest thereon was calculated at Rs. 3,52,993.50 bringing the total sum to Rs. 6,00,545.03.

So far as the Gratuity amount was concerned, the same was mentioned at Rs. 3,77,850.00 paise. These amounts were proposed to be forfeited.

8. It appears that on 16.9.2008, the Respondent No. 1 had filed an Application in Form "N" under Rule 10(1) of the Payment of Gratuity (Central) Rules 1972 alleging that he was entitled to receive gratuity under Section 4 of the Payment of Gratuity Act 1972 on account of his retirement on 31.8.2006 and therefore, the Controlling Authority was requested to determine the amount of gratuity payable to him so that the Petitioner Bank could be directed to pay the same.

Consequently, on 14.10.2008, the Controlling Authority issued a Notice asking both the Chief Manager of the Petitioner Bank as well as the Respondent No. 1 to appear before him either personally or through any authorised representative on 19.11.2008.

9. On the said day, i.e. 19.11.2008, both the Respondent No. 1 as well as the representative of the Petitioner Bank appeared and attended the hearing and sought for 30 days' time for filing written comments. Accordingly the Respondent No. 3 fixed the next date as 31.12.2008. However, subsequently the matter was fixed on 12.2.2009.

10. Thereafter the Petitioner filed its written comments dated 12.2.2009 (appears to have been wrongly mentioned in para-14 as 3rd February, 5 2009) (Annexure-P/8) whereby and whereunder it inter alia took the following stand :-

a) since Regulation 20(3) (iii) of the Dena Bank (Officers) Service Regulations, 1979 had been invoked, the Respondent No. 1 was therefore paid his own contribution towards PF only but the other terminal benefits such as the Bank's contribution and gratuity were withheld till the proceedings were completed and final order passed;

b) when the proceedings came to an end by passing the final order, his eligibility to receive gratuity was examined by the competent authority under the provisions of Rule 12 of the Dena Bank employees Gratuity Fund Rules read with Section 6 of the Payment of Gratuity Act, 1972.

On the basis of such examination, the Petitioner Bank observed that lapses on the part of the Respondent No. 1 had caused huge financial and irreparable reputational loss to the Bank and therefore, he was dismissed from service for not discharging his duties with utmost honesty and integrity. Therefore, he was given an opportunity to make his submissions on the proposal to forfeit his gratuity vide Notice dated 22.12.2008 (Annexure-P/5) and although the said notice was received by him on 31.12.2008, the Respondent No. 1 did not file any reply and therefore, by a letter dated 30.1.2009 (Annexure-P/6), the Chief Manager informed him that since he had not filed any reply, it was presumed that he had nothing to say in that regard and therefore, the competent authority forfeited the sum of Rs. 3,77,850/- being the 6 Gratuity amount under the provisions of Rule 12 (B) (II) of the Dena Bank employees Gratuity Fund Rules read with Section 4(6) (b) (ii) of the Payment of Gratuity Act, 1972.

     Section       4     of     the        Payment    of      Gratuity      Act,   1972

     reads as follows:-

"4. Payment of gratuity.- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-

(a) on his superannuation, or

(b) on his retirement or resignation, or

Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

[Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the Controlling Authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority.] Explanation.- For the purposes of this section, disablement means such disablement as incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee at the rate of fifteen days' wages based on the rate of wages last drawn by the employee concerned:

Provided that in the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for any overtime work shall not be taken into account:

Provided further that in the case of [an employee who is employed in a seasonal establishment and who is not so employed throughout the year], the employer shall pay the gratuity at the rate of seven days' wages for each person.

[Explanation.- In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by fifteen.] (3) The amount of gratuity payable to an employee shall not exceed [three lakhs and fifty thousand] rupees.

(4) For the purpose of computing the gratuity payable to an employee who is employed, after his disablement, on reduced wages, his wages for the period preceding his disablement shall be taken to be the wages received by him during that period, and his wages for the period subsequent to his disablement shall be taken to be the wages as so reduced.

(5) Nothing in this section shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer;

(6) Notwithstanding anything contained in sub-section (1),-

(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused;

(b) the gratuity payable to an employee [may be wholly or partially forfeited]-

(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."

(Quoted) On the basis of the aforementioned submissions, the Petitioner Bank contended that the application of the Respondent No. 1 did not deserve any consideration and the same was liable to be dismissed.

11. Thereafter, the Respondent No. 3 passed the impugned Order dated 23.3.2009 (Annexure-P/9) directing the Bank to pay the gratuity to the extent of Rs. 3, 50,000/- along with simple interest @ 10% per annum on the said amount from the date it was payable.

12. The Petitioner Bank filed an appeal after depositing a sum of Rs. 4, 51,548/- towards the principal amount of gratuity including interest thereon and a Certificate to that extent was issued on 27.7.2009 vide Annexure- P/11 by the Controlling Authority.

The Respondent No. 1 filed a counter reply to the said appeal and the Bank also filed its rejoinder.

13. By a judgment dated 22.9.2010, the Regional Labour Commissioner (C) Kolkata-cum-Appellate Authority passed its judgment upholding the decision of the controlling authority delivered on 23.6.2009 holding that the Respondent No. 1 was entitled to receive gratuity with interest.

14. According to the Petitioners, both the impugned Orders suffer from a complete non-application of mind. Both have totally failed to appreciate that the charges levelled against the Respondent No. 1 were proved in a departmental proceeding and in spite of having received an opportunity to show Cause as to why his gratuity should not be forfeited, the Respondent No. 1 did not avail this opportunity and did not also file his reply thereto. According to the Petitioners, both the impugned Orders did not take into consideration the judgment of the Hon'ble Supreme Court passed in the case of Tara Chand Vyas vs. Chairman and Disciplinary Authority & Ors. reported in 1997 (II) LLJ 26 in which it has been held that the conduct of employees and officers working in nationalised Banks should be in the discharge of their constitutional objectives and if there is any dereliction on their part, the same impinges upon the 9 enforcement of constitutional philosophy, objective and the goals under the Rule of law. Their further contention is that while passing the impugned Order dated 22.9.2010 (Annexure- P/13), the appellate authority misapplied the ratio laid down in the case of Krishnendu Narayan Ghosh vs. Union of India reported in 2000 (1) LLJ 1543 without taking into consideration that in this case, the Bank had already invoked Regulation 23(3) (iii) of the Dena Bank (Officers) Service Regulations, 1979 where, disciplinary proceedings initiated while the employee was in service, would continue even after retirement until the proceedings were concluded and final orders passed thereon.

They have further contended that the appellate authority misapplied the ratio of the judgment passed in the case of Dena Bank vs. Amiya Kumar Dey reported in 1988 (1) CLJ 1543 without appreciating that in the instant case, the provisions of Regulations 23(3) (iii) had been invoked but in the said case the same had not been so invoked.

15. The Respondent No. 1 has filed an affidavit-in-opposition wherein he has stated, while referring to the Charge-sheet dated 3.4.2006 (Annexure-P/1) and as referred to in para-4 of the Writ Petition, has stated that while he was performing his duties as a Manager in the Behrampur Branch during the period 2002-2005, a show-Cause notice was issued asking him to explain some advances that were made during the said period. He successfully explained his position and the competent authority closed the matter upon satisfaction but even thereafter and with a pre-determined motive, the Bank issued the charge-sheet in question on the self-same allegations. He has further 10 stated that baseless allegations had been made in the charge-sheet and he had become mentally disturbed and that he had insisted that the proceedings should be concluded before his retirement. However the enquiry had started on 5.5.2006 and it was concluded on 5.7.2006. Thereafter he had submitted his written argument on 9.8.2006 with an expectation that the enquiry officer will give his findings and that the matter will be settled before his retirement and under such circumstances, the statements of the Bank with regard to invocation of Regulation 20(3) (iii) is an afterthought. He has further stated that he was entitled to know the decision before his retirement but such an opportunity was not given to him. He has further stated that the Bank had issued a letter intimating him that he would retire from his service from 31.8.2006. The management had approved his retirement without any reservations and therefore a subsequent proceeding and an order arising therefrom are bad in law. He has also submitted that Regulation 20(3) (iii) was invoked without intimating him about the decision for proceeding after retirement. He has further submitted that the relationship of the master and servant ceases after superannuation and no proceeding can lie thereafter particularly when Regulation 20(3) (iii) was not invoked by the Bank on or before retirement. He has stated in para-7 that the story of invocation of Regulation 20(3) (iii) is an afterthought because he was never given notice of such invocation before his retirement and that the Bank had failed to prove service of notice of the letter dated 17.8.2006 before his retirement. He has also repeated in para-10 that Regulation 20(3) (iii) was not invoked before his retirement.

This Court has noticed that a forfeiture Notice was issued on 22.12.2008 vide Annexure-P/5. The Respondent No. 1 was found guilty in a departmental proceeding and he was dismissed from service by an Order dated 1.3.2007 w.e.f. 31.8.2006. Under the provisions of Section 4(6), the gratuity of an employee can be forfeited wherever there is any finding that the services of an employee has been terminated for, inter alia, causing damage or loss of property belonging to the employer. In the instant case, the Petitioner's services were terminated on the basis of a Charge-sheet that was issued on 3.4.2006. This was issued prior to the retirement of the Petitioner. Regulation 20(3) (iii) of the Dena Bank Officers Service Regulations 1979 quoted above clearly lays down that the officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final orders passed thereon. In other words, whether there is invocation of Regulation 20(3) (iii) or not is not material because such a Regulation is already in existence. Consequently even if a notice for invocation of such Regulation was not given to the Respondent No.1, that by itself cannot mean that such a Regulation will not have effect. Such a Regulation will always have effect even if it has not been invoked because it is a part of the service Regulations of an Officer. Since the charge-sheet was issued on 3.4.2006, the Respondent No. 1 ceased to be in service on and from 31.8.2006 (the date of superannuation) but the disciplinary proceedings will be deemed to continue as if he was in service until they were concluded and final order passed thereon. It was not necessary for giving notice 12 of invocation of this Regulation as has been contended by the Respondent No. 1 but nevertheless the Petitioner did invoke the said Regulation on 17.8.2006 vide Annexure-P/1A.

16. The controlling authority, while passing the impugned Order dated 23.6.2009 should have taken care to examine the payability of gratuity in the face of Section 4(6) (b) (ii) without passing an order as if it was an appellate authority on the departmental action taken by the Bank against an erring employee. The said controlling authority could not have given a finding that the opposite party had "failed to prove any wilful omission or negligence causing any damage or loss to the property belonging to the opposite party Bank." This amounts to questioning the punishment order itself by an authority under the Payment of Gratuity Act. This therefore also amounts to entering into a domain where an authority under the Payment of Gratuity Act had no jurisdiction to question the findings given in a departmental proceeding. His authority is confined only to giving a finding as to whether an employee is entitled to the gratuity or not. If the facts are that the services of an employee have been terminated on a finding of causing loss to the property of an employer then his action is confined only to passing an order strictly in terms of Section 4(6) of the Payment of Gratuity Act, 1972 but he cannot travel beyond the same by giving a finding as if he was an appellate authority of the disciplinary proceedings. Consequently he had no authority to enter into the charge-sheet itself and give a finding on the manner in which the proceedings were held. The observations of the controlling authority therefore are wholly without jurisdiction as they amount 13 to interfering with the disciplinary proceedings itself. These observations are as follows:-

"The employer in order to take advantage of his clause (a) has to prove four things viz:-

1. That the services of the employee in question have been terminated.

2. That such termination of services was for an act, wilful omission or negligence on the part of the employee.

3. That such act of wilful omission or negligence caused loss or damage or destruction of the property belonging to the employer.

4. The extent of damage or loss caused due to the above acts on the part of the employee.

In the instant case the O.P. has failed to prove any wilful omission or negligence causing any damage or loss to the property belonging to the Opposite Party Bank. Therefore, they have no right to make any deduction from the gratuity payable to the applicant. If the loss caused to the property of an employer is due to any act of omission or negligence on the part of the employee but not due to "wilful omission" or "wilful negligence"

then also an employer has no right to make deduction to the extent of loss or damage. In other words, there must be loss or damage and such loss or damage should be to the property of the employer and must be caused due to the "wilful Omission" or "wilful negligence" and not merely for "omission"

and "negligence". In cases where the acts of deliberate negligence and of wilful omission on the part of an employee have resulted in causing damage or loss to the property of the employer, gratuity has been allowed to be forfeited to the extent of loss or damage caused and no more. In short, the damage or loss to the employer's property or the property belonging to the employer should be due to act of "wilful omission or negligence" on the part of the employee. Mere negligence, however, gross it may be, may not be sufficient to attract the provision. In the instant case, the services of Shri Tejendra Biswas, the applicant has been terminated on 31.08.2006 for alleged misconduct which according to the management has been proved. I have examined the chargesheet issued to the applicant and other relevant documents and found that the applicant had worked in Berhampore branch for three years from 2002 to 2005. The advances were sanctioned to the parties over a period of time but during the entire tenure of his services, he was not questioned on any lapse at the appropriate time. The relevant returns were submitted by him to the competent authority in time and whenever an query was raised the applicant explained the matter and the case was closed. The disciplinary process started in November 2005 with a show-cause notice alleging irregularities in 22 accounts, which were subsequently converted into chargesheet in April 2006 i.e., after a lapse of nearly 6 months when the applicant's retirement was due in August 2006. The enquiry was hurriedly concluded in the last week of July 2006 and again the second chargesheet was issued to him after his retirement in November 2006 concerning 10 accounts. Therefore, it transpired that the O.P. had not given due 14 deliberation to the actual charges in time involving the other concerned workmen/officers in the instant case. The reason for issuance of second chargesheet after the retirement of the applicant is not amply clear and could not be substantiated by adducing ample evidence by the Opposite Party."

(Quoted) Similar error has been committed by the Regional Labour Commissioner acting as an appellate authority under the Payment of Gratuity Act. He has observed inter alia as follows:-

"In the instant case, the services of Shri Tejendra Nath Biswas, the applicant, has been terminated on 31.08.2006 for alleged misconduct which according to the management has been proved. I have examined the charge sheet issued to the applicant and other relevant documents and found that the applicant has worked in Berhampore Branch for three years from 2002 to 2005. The advances were sanctioned to the parties over a period of time but during the entire tenure of his services, he was not questioned on any lapse at the appropriate time. The relevant returns were submitted by him to the competent authority in time and whenever a query was raised the appellant explained the matter and the case was closed. The disciplinary process started in November 2005 with a show-cause notice alleging irregularities in 22 accounts, which were subsequently converted into charge sheet in April 2006 i.e. after a lapse of nearly 6 months when the applicant's retirement was due in August 2006. The enquiry was hurriedly concluded in the last week in July 2006 and again the second charge sheet was issued to him after his retirement in November 2006 concerning 10 accounts. Therefore, it transpired that the O.P. had not given due deliberation to the actual charges in time involving the other concerned workmen/officers in the instant case. The reason for issuance of second charge sheet after the retirement of the applicant is not amply clear and could not be substantiated by adducing ample evidence by the Opposite Party."

In this connection I like to quote some judgment of Hon'ble Supreme Court of India and High Court, Kolkata Hon'ble High Court Kolkata in the case between Krishnendu Narayan Ghosh Vs. Union of India (2000-I-LLJ) where in Hon'ble High Court has held that after a person seems to be an ex-employee, question of disciplining him does not arises. It has to be kept in mind that the proceedings are disciplinary proceeding aimed at disciplining an employee. After an employee ceases to be an employee, there is no scope to discipline him. Court further held that disciplinary proceeding initiated lapse on his superannuation and accordingly notice of enquiry are no effect.

Hon'ble Supreme Court in the case of State Bank of India Vs. A.N. Gupta (1997 FLR) and Ors. held that continuation of departmental proceeding after retirement is not permissible unless there is a specific provision to the effect in the relevant rules.

Calcutta High Court in the case of Dena Bank Vs. Amiya Kumar Dey (1988- CLS) held that it was the paramount duty of the Bank to complete the disciplinary proceedings before the delinquent retired. The Division Bench further held that on retirement of the delinquent the relationship of master and servant has come to an end and there is no statutory provision under which the departmental proceedings initiated against a retired employee can be continued and that after the delinquent reaches the age of superannuation there is no further scope in the departmental proceedings to make any finding against the delinquent inspite of leveling charges against him in the departmental proceedings." (Quoted) For the reasons aforesaid, this Court is of the view that the authorities under the Payment of Gratuity Act could not have sat in appeal over findings of disciplinary authorities and therefore the impugned Orders are wholly without jurisdiction and consequently illegal.

For the foregoing reasons, the Writ Petition must succeed and it is accordingly allowed to do so. The Writ Petition is allowed. The impugned Orders dated 23.6.2009 (Annexure-P/9) and 22.9.2010 (Annexure-P/13) are set aside.

There shall, however be no order as to costs.

Upon appropriate Application(s) being made, urgent Xeroxed Certified copy of this Judgment, may be given/issued expeditiously subject to usual terms and conditions.

(Tapen Sen, J.) ...............June, 2011 S.B A.F.R / N.A.F.R.

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